Excel file

Question Set 1. Apple is considering different R&D paths for the upcoming years release. The five strategies (along with changing nothing) under consideration are:

• Decrease Width: Decrease the width of the phones without changing other specs
• Less Battery: Decrease battery capacity of phones by 4%
• Mixed: Combine above two strategies
• More Battery: Increase battery capacity of phones by 8%
• No Change: Do not change anything, buyers seem content

The outcomes of the possible strategies (in millions of dollars) depend on how the competitors behave. Apple considers four different outcomes, which are not shared, say 1, 2, 3 and 4. Negative values indicate loss for Apple and positive values indicates possible profits.

	Scenarios
Strategy	1	2	3	4
Decrease Width	-70	-30	35	70
Less Battery	-75	-20	35	70
Mixed	-60	-35	30	60
More Battery	-45	-30	15	50
No Change	-60	-25	40	45

For the following questions, you will use Excel to identify the best strategy according to various criteria. You only need to perform the necessary calculations to show which one is best. For example, the first question is for maximax. You need to set up formulas to find the maximum payoff for each strategy and to then find the highest value among them. However, once you have calculated that highest value, you can just type in the corresponding strategy without any further Excel calculations.

1. What would be Apples decision using the maximax criterion? (3pts)

2. What would be Apples decision using the maximin criterion? (3pts)

3. What would be Apples decision using the Laplace criterion? (3pts)

4. What would be Apples decision using the minimax regret criterion? It is helpful to construct a regret table for this problem. (6pts)

Question Set 2. This question set uses the table of outcomes from Question Set 1 for Apples strategies. Assume that the probabilities for scenarios are:

• P(Scenario 1) = 0.20
• P(Scenario 2) = 0.25
• P(Scenario 3) = 0.35
• P(Scenario 4) = 0.20

1. What decision will maximize Apples expected monetary value? (9pts)

2. What is the expected value of perfect information? (6pts)

Question Set 3. This question set uses the metropolitan model for facility location decisions. Each demand source has a weight indicating the volume of sales it is expected to generate. Using the demand data and five potential locations on the following page:

1. Find the sum of weighted metropolitan model distances for each of the five locations. Be sure the calculations are shown for each locations sum of distances. (8pts)

2. As evidenced by having the smallest weighted sum of distances, which location is best? (2pts)

Demand Data
Weight	A	B
2	28	33
4	30	34
5	28	28
1	35	32
3	30	28
2	32	33
3	26	27
2	27	28
1	27	27
6	30	31
3	27	24
5	30	31
3	28	24
3	27	26
4	25	28
1	34	29
7	30	37
2	25	36
2	31	33
2	30	33

Location	A	B
X	26	32
Y	33	31
Z	31	33
T	31	29
W	32	29